Tokyo Report: Online Brokers Push Forex Margin Trading

Tokyo, Feb. 23 (Jiji Press)--Japanese online securities houses are promoting foreign exchange margin trading services in a bid to diversify earnings sources due to plummeting revenues from brokerage commissions caused by stock price falls amid the global financial crisis.

Foreign exchange margin trading allows investors to buy and sell
currencies in amounts up to several hundred times their margin deposits. It
has attracted investors since last year due to plunges in stock prices and
wild fluctuations in currency markets.
Online brokerage firms have taken a series of measure to promote
foreign exchange margin trading. For example, Rakuten Securities Inc. began
services free of commissions in May last year. SBI Securities Co., Japan's
largest online brokerage house, followed suit in July.
Furthermore, SBI Securities cut its minimum lot for trading from
10,000 currency units to 1,000 in November, to make its service more
affordable to investors.
Online brokerage firms are also devising services to distinguish
themselves from rivals, as competition by cutting or eliminating commissions
eats into their financial strength.
In July, for example, Rakuten Securities doubled its leverage rate
to 100 times the margin deposit and lowered margin requirements to help
investors take greater advantage of the high-risk, high-return nature of
foreign exchange margin trading.
Meanwhile, Monex Inc. has cut its lowest leverage rate to one times
the margin deposit to allow investors to start foreign exchange margin
trading as if they were using foreign currency deposits, because of an
increase in the number of people seeking stable returns.
Among other measures taken by online brokerage houses to ease
investor concerns about the safety of foreign exchange margin trading,
Monex, Matsui Securities Co. <8628> and Rakuten Securities have started
keeping customer assets in trust accounts at financial institutions with
high credit ratings, separately from their own assets.
Kabu.com Securities Co. <8703> has introduced a system to start
loss-cutting trades automatically during erratic market fluctuations.
Foreign exchange margin trading is one of the few growth markets
for brokerage firms and competition among them is thought certain to
intensify further.
SBI Securities, for example, hopes to earn 20 pct to 30 pct of all
earnings from such trading in the foreseeable future, up from less than 10
pct at present, says Hideaki Imai, manager of the company's products
department.